The Georgia Supreme Court has ruled that insurance policyholders may recover losses for “diminution in value” in addition to the repair costs associated with damages to real estate property.
The court ruled in Royal Capital Development LLC v. Maryland Casualty Co., that a 2001 Georgia Supreme Court decision, which allowed coverage for the cost of repair plus diminution in value under automobile policies, should also be applied to claims for damage to real property, including damage to commercial buildings.
The court said the ruling would place “injured parties, as nearly as possible, in the same position they would have been in if the [property damage] had never occurred.” Under the ruling, insurers now must pay for damage repairs to a home or business and also for the diminished value of the property.
As a result of the decision, insurers that insure property risks in Georgia and wish to exclude “diminution in value” would have to include the exclusionary language in their policy wordings.
The Court rejected a 2007 Georgia Court of Appeals decision holding that allowing damages for diminution in value as well as for the costs of repair would be an impermissible “double recovery.” Maryland Casualty has filed a motion asking the court to reconsider its opinion.